Learning by interactions with outside directors in family business boards: a dynamic perspective

This paper investigates the impact of outside directors on firm performance during legal transitions and examines how the roles of family business and director compensation influence board efficacy. By using Taiwanese listed companies as our sample, the empirical results show that outside directors who are appointed by legal mandate have less positive impacts on firm performance than outside directors appointed voluntarily. Family business weakens the positive impact of outside director on firm performance. The evidence further suggests that director compensation contributes to firm performance, particularly when outside directors are voluntarily appointed. The findings provide western managers with an understanding of how the typical Chinese family business affects board independence. We also demonstrate and incorporate the cultural and the ownership characteristics into the analysis to present a country-specific pattern that should be informative for foreign investors who are concerned about the quality of corporate governance in East Asia.

Download Full-text

Differential Directorship: Special Sensitivities and Roles for Serving the Family Business Board.

Family Business Review ◽

10.1111/j.1741-6248.1988.00239.x ◽

1988 ◽

Vol 1 (3) ◽

pp. 239-247 ◽

Cited By ~ 19

Author(s):

Robert K. Mueller

Keyword(s):

Corporate Governance ◽

Family Business ◽

Outside Directors ◽

The Family

An expert on corporate governance discusses the special sensitivities that outside directors need and how they use these characteristics in the roles that they play on the family board.

Download Full-text

A Business Owner's Perspective on Outside Boards

Family Business Review ◽

10.1111/j.1741-6248.1988.00231.x ◽

1988 ◽

Vol 1 (3) ◽

pp. 231-237 ◽

Cited By ~ 13

Author(s):

Clayton L. Mathile

Keyword(s):

Family Business ◽

Family Firm ◽

Outside Directors ◽

Business Executives

Experience in selecting and working with outside directors is not yet common among family business executives. This firsthand account from the president of a family firm describes how he chose his board and how he works with his directors.

Download Full-text

Board composition in family-influenced firms: A dynamic perspective

Corporate Board role duties and composition ◽

10.22495/cbv6i3art2 ◽

2010 ◽

Vol 6 (3) ◽

pp. 21-30 ◽

Cited By ~ 2

Author(s):

Wiem El Manaa ◽

Wafa Khlif ◽

Coral Ingley ◽

Lotfi Karoui

Keyword(s):

Succession Planning ◽

Boards Of Directors ◽

Family Firms ◽

Family Firm ◽

Board Composition ◽

Outside Directors ◽

Governance System ◽

The Family ◽

Dynamic Perspective ◽

The Impact

This paper uses a sample of 76 family businesses in Tunisia to investigate the impact of the family firm dynamic on the composition of their boards of directors. We argue that whether or not a transition in ownership is planned, firms have different governance needs and characteristics depending on the generational phase. The empirical results show that board composition is positively influenced by both generational evolution and succession planning. This study provides evidence of an increase in the appointment of outside directors to boards of family firms from the third generation of ownership. This result implies that it is important to consider the generational phase and succession process of the family firm in order to better understand its governance system.

Download Full-text

Through the Eyes of the Beholder

The International Journal of Entrepreneurship and Innovation ◽

10.5367/000000000101298658 ◽

2000 ◽

Vol 1 (3) ◽

pp. 151-161 ◽

Cited By ~ 1

Author(s):

Colette Dumas ◽

Sanjay Goel ◽

Alberto Zanzi

Keyword(s):

Board Of Directors ◽

Family Business ◽

Business Owners ◽

Board Members ◽

Positive Perception ◽

Outside Directors ◽

Compensation Structure ◽

The Family ◽

The Board Of Directors ◽

Practical Implications

This study posed several questions about the determinants of family business CEOs' perceptions of the board of directors. Specifically, the authors investigated whether the following factors played a role in determining the positive perception of their contribution by the family firm's CEO: the compensation structure of the board of directors of a family firm; the number of outside directors; the size of equity held by the board; and the directors' formal efforts for the benefit of the firm. It was found that the number of outside directors and their formal efforts for the firm played a significant role in determining the CEOs' perceptions of their contribution, whereas their compensation and size of equity had no effect on how they were perceived. This suggests that family business owners value the independent perspective that outside board members bring to a board. In addition, the results suggest that family business owners value (and are sensitive to) the effort board members put into the discharge of their duties. The evidence that independence in the board is highly valued provides reason for optimism about the continued survival, growth and adaptability of family businesses. Other research and practical implications of this study are also described.

Download Full-text